A Montclair solo has been reprimanded for running up a high balance on the credit card of an elderly, blind client and allowing the account to fall into arrears.
The state Supreme Court ordered the discipline on April 7, finding Kenneth Strait Jr. violated Rule of Professional Conduct 1.8(a)’s proscription against entering into business transactions with clients where their interests are adverse.
The Court followed the recommendation of the Disciplinary Review Board, which decried the advantage Strait took of Gloria Hemphill, a woman in her mid-70s and legally blind with whom he had a personal relationship as well as a fiduciary one.
Strait and Hemphill had known each other since at least 1984, six years before his admission to the bar, and according to their testimony they considered their relationship as akin to mother and son.
In 1993, Strait represented her when she was hit by a car while crossing the street. He settled without filing a suit and charged no fee for his services, giving her all the settlement proceeds.
In 2003, when Strait was left without credit cards due to his divorce proceedings, Hemphill offered to obtain a card for him on an American Express Blue Card account she was not using. It was a revolving account that charged interest on the balance carried over each month.
Hemphill testified that she gave Strait the card because they were friends, but that she still considered him her lawyer, even though he was not representing her then. She also testified that she knew she was responsible for the card’s balance if Strait did not pay it.
Strait testified that when he accepted the card, he did not think of Hemphill as his client, but as his “surrogate mother.”
Bills for the account were mailed to Strait’s home, and he agreed to pay them, though he and Hemphill never put their agreement in writing.
In April 2005, for a small fee, Strait drafted a will for Hemphill at her request, naming himself as executor. At that time, the card balance was more than $18,000, though Hemphill did not know it.
In August 2006, Strait drafted a power of attorney agreement for Hemphill, in which he was named agent/attorney-in-fact. At that point, the card balance was more than $41,000, but Hemphill did not know that either.
In summer 2008, Strait and Hemphill began getting past-due calls from American Express. By then, the unpaid balance had reached $49,000. When she confronted him, he apologized and promised to bring the account up to date. But American Express kept calling, prompting Hemphill to fear that her life savings would be lost. She repeatedly called Strait at his home and office. He later admitted to “dodging” her, claiming he had no money to pay the debt and was ashamed to admit that to her.
Hemphill hired another attorney to help her with the credit card problem. The new lawyer secured the return of the card from Strait and put him on an installment plan. Hemphill also revoked her power of attorney agreement, executed another will and filed an ethics complaint.
In March 2009, Strait sent a $10,000 money order to the attorney and thereafter he paid the credit card company $2,000 a month. At the time of the District VC Ethics Committee hearing on April 6, 2010, Strait said he thought he had paid off the entire balance on the card but learned that “a small amount of interest” was still outstanding.
Strait told the DEC that no attorney-client relationship existed at the time he accepted the card. He said he considered Hemphill’s offer to use it an act of friendship unrelated to an incidental attorney-client relationship amounting to three small matters over 25 years.
The DEC found Strait violated RPC 1.8(a) by failing to put his agreement with Hemphill in writing and failing to advise her to seek other counsel. Noting Strait’s unblemished ethics record, his remorse and his free legal services to Hemphill in the personal injury case, the DEC recommended an admonition.
But the DRB found the mitigating factors outweighed by aggravating circumstances, namely, Strait’s “failure to inform Hemphill about the debt; his false assurance to her that he would make the account current; his failure to return her numerous telephone calls, when she continued to receive collection calls, a circumstance that eventually drove her to retain another attorney; and the advantage that he took of his close relationship to this vulnerable client and friend.”
The DRB noted that imposition of a reprimand has long been the discipline for a conflict of interest.
Strait declines to comment. His attorney, Gerard Hanlon of Morristown’s Hanlon, Dunn & Robertson, says he accepts the court’s finding that rules governing a lawyer-client relationship applied at all times in his client’s relationship with Hemphill.
But Strait didn’t think of the relationship as one between lawyer and client at the time he accepted the credit card, says Hanlon.
Although he has made full restitution, Strait is “extremely remorseful” and has “terrible regret” about his actions in the case and is seeking to mend fences with Hemphill, Hanlon adds.
